Everyone in the healthcare world is trying to figure out how to manage risk – whether that is something basic – like switching to online appointment scheduling – or something major – like moving a health system’s providers to value-based contracts.
I spoke with Valence Health President Todd Stockard recently to understand what it takes to move from fee for service to pay for performance. We talked about the big-picture changes as well as operational shifts that need to take place for health systems to succeed with this new approach. Valence works with providers to develop and implement better patient care strategies, focusing on the development of clinical and financial driven data models for managing provider-sponsored risk entities.
“We tell our clients that they better off taking as much risk today before adopting all this tech so that they benefit from day 1,” he said.
With the Rise of AI, What IP Disputes in Healthcare Are Likely to Emerge?
Munck Wilson Mandala Partner Greg Howison shared his perspective on some of the legal ramifications around AI, IP, connected devices and the data they generate, in response to emailed questions.
He said Valence does a lot of education around the fact that risk for a hospital is much different than risk for a health plan, particularly if a hospital has capacity.
“When a health plan buys health care from a hospital, it costs them $2,500 per day, but for a hospital, it could cost them $400,” he said. “The only risk is that person gets referred to a competing hospital.”
Stockard said that Valence’s analytics is only about 30% of the solution that many clients use. The rest is back office infrastructure and help shifting the business model.
Stockard said that Valence provides a back office structure for a health system in Madison, WI, that has 400,000 members 50% owned by docs. .
A Personalized Approach to Medication Nonadherence
At the Abarca Forward conference earlier this year, George Van Antwerp, managing director at Deloitte, discussed how social determinants of health and a personalized member experience can improve medication adherence and health outcomes.
“We help hospital systems evolve to become payers,” he said. “We believe that all the premium dollars should be spent on medical care.”
Stockard said that Valence works with half the free-standing children’s hospitals in the country. The company’s biggest client in that space is Driscoll Children’s Hospital in Corpus Christie, TX.
“For a children’s hospital, 40% of their revenue is Medicaid,” he said. “They can easily become health plans.”
He estimates that there were 120 or 130 provider-sponsored health plans in the country today and that between one-third and half of those plans are in value-based contracts.
Here are three key elements that health systems need to consider if they want to evolve to a value-based model.
Combining data from health systems and independent doctors
Stockard said that Valence’s sweet spot is working with health systems that have an even split between employed and independent doctors.
“Health systems have a good handle on the employed docs, but they have no idea what is going on out in the community,” he said.
Valence’s software sits in the computer systems in physician offices and pushes relevant patient info out into the larger health system and creates a longitudinal patient record.
“We can now tell doctors, ‘Here are your diabetics that you better get in and pay attention to, and by the way, these 15 patients showed up in the ER yesterday,'” he said.
Implementing true population management
Stockard said the industry really is at a pivotal moment in terms of analytics and the availability of data.
“It used to be that the only data that docs and hospitals had access to was information that the plan provided to them,” he said. “They are now able to more easily say, here are my diabetic patients with a high A1C who will drive 20% of my costs. It’s easy to lazer in on the population.”
Implementing population health strategies is a key part of Valence’s recent deal with Humana.
Changing doctors’ habits
Stockard said that another factor in the risk equation is having enough of a doctor’s patient population in value-based contracts. If the percentage is too low – 5% for example – doctors will keep their habits from the fee-for-service world.
“The tipping point is getting 30 – 40% of patients in value-based contracts before you can change the workflow,” he said.
Stockard said that having easy access to performance data brings our the competitive streak in doctors also.
“There’s a huge sentinel effect associated with share cards and peer comparisons. It may not be me vs. Joe but it is me vs. my peers,” he said. “Doctors want to know, ‘Am I in the upper quartile?’”
Stockard said that this shift to value-based contracts and more price transparency changes referral patterns also.
“If you learn that the guy you’ve been referring to is the least cost effective in the community, it doesn’t take much to get you to refer to someone else,” he said.
